I totally get that it has value...and more so than the dollar. I just dont get how anyone trusts digital currency. What happens when the grid goes down?
And as a layperson, I am not at all convinced that the creator of bitcoin (or whoever controls it) cant inject as much as they want into their own wallet. It was created once, what gives you the confidence that it is not continuously being created?
The block chain is also a ledger that multiple people have so if you "inject" something, it gets checked against all the ledgers and since they don't agree, the injection is rejected. To do this, you would have to actually alter the blockchain. And because you would have to alter every ledger, it's just not going to happen. It'd be like doing a man-in-middle attack for an online transaction between two banks. You can tell one of them that their other one is depositing an extra million dollars but when they both check the ledgers, they won't agree so the transaction won't go through.
The blockchain is public. You can go and download the whole thing and analyze it. And people have.
You can still deal with bitcoin without a grid. You can trade paper slips with your keys on it (after all, it's just a decryption puzzle and the key is like a serial number on a dollar bill). The trade doesn't have value (only the promise of value kinda like gold backed currency or old style silver and gold certificates where the bank certifies that it has that much gold and you can trade it in for the value on the face of the certificate). The value can't be cashed in until the grid is back up, however (until the bank is open). This is one of the big problems with a digital currency. You could, in theory, trade several people the same key (dollar) but the only one to get it is the one that registers the transfer first. In this case, you'd be a thieving piece of shit but that's another story.
But until the grid completely collapses, that won't happen. On top of it all, as long as one transaction node has a ledger, you can make transactions against it and, if legitimate, will replicate to the other ledge nodes. As soon as a second node comes back up, the transactions can be verified and entered into the chain.
Ok, that's good that there is a ledger and some actual accountability. Thanks for helping me understand.
As far as paying while off the grid though...what would stop someone from writing down the same key and handing it to everyone he does business with. They wouldnt be able to verify until the grid is back up right?
Well, I did say that you could do that. And that's correct. But what you're talking about is effectively SHTF/End of the World/Apocalypse scenario, really. The resiliency of the internet and cell networks means that it would take more than a local outage to deal with it.
But if the power goes out or you need cash right now, bitcoin is not the currency to use. It relies on certain parts of civilization. But then again, a lot of things do too. So it's not really much different, if you think about it.
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